With recent worldwide hits such as the Game of Thrones, video game developers like Rockstar North and artists such as Adele, it is no wonder the UK’s creative industry has become one of The UK’s biggest exports at 8.7%. Our creative Industry is now worth a massive £84.1bn a year to the UK economy and accounts for 1 in every 11 jobs.
It is a common misconception that creative businesses have a short life span, as survival rates for new businesses in the creative industry, at 49.7%, are actually higher than the economy average. Could this have been aided by generous tax schemes and the governments creative industry strategy?
The government has allowed the creative industry significant tax reliefs since 2007. These tax reliefs are for the following activities
- Film
- Animation
- High-end television
- Children’s Television
- Video games
- Theatre
If your company’s business activity involves one of the above, then you could be eligible to claim a larger deduction in your corporation tax or potentially claim a payable tax credit when calculating your taxable profits. Different deductions apply to each and some sectors are subject to passing a ‘cultural test’. All companies can only qualify if:
- liable to Corporation Tax
- directly involved in the production and development of certain films, ‘high-end’ television programmes, animation programmes or video games
In addition to the corporation tax reliefs there is the Enterprise Investment Scheme and Seed Enterprise Investment Scheme. The Enterprise Investment scheme offers 30% income tax relief for investments of up to £1m in companies that are not listed on the Stock Exchange. The Seed Enterprise scheme offers a very lucrative 50% income tax relief, but you can only invest up to £150,000. These schemes may not be creative industry oriented but many creatives have taken advantage of the scheme since its introduction.
In the 2016 budget, the government stated that they will be announcing another tax relief in summer 2016 for museums and galleries to develop their exhibitions. The eligibility criteria for the VAT refund scheme is also to be expanded for museums and galleries.
All of these tax reliefs have been put into place as part of the UK’s Creative Industry strategy. The aim was to give businesses access to finance, infrastructure and a workforce with the right skills in order to see continued growth in the industry. So far it seems to be working as the sector is buzzing.
E R Grove & Co have plenty of experience working with creatives, whether it has been supporting a film producer to get their film onto the big screen or assisting creative agencies with managing their cash flow. If you would like support with accessing any of the schemes mentioned, then please get in touch.
